Monica Mason was 20 and still a very junior member of the Royal Ballet when she was presented with one of the defining opportunities of her career. She was at a house-warming party given by fellow dancers and among the guests was the company's rising choreographic star, Kenneth MacMillan. It was 1962 and Mason remembers that the music was very loud and she herself was being very outrageous. "I always loved dancing at parties, but that night I was showing off like hell. I was pretty sure Kenneth was watching me."

He was, and something in Mason's recklessness obviously impressed him. A few days later the choreographer took her aside and said: "I'm going to make a new ballet, and I want you to be the lead."

That ballet was MacMillan's new version of Stravinsky's TheRite of Spring and it was both a daunting and sensational gift. Mason was cast as the Chosen Maiden, who dances herself to death at the ballet's climax; and coping with the ferocious rhythms of Stravinsky's score as well as the harrowing demands of the choreography was beyond anything she had experienced. Anthony Dowell (former principal dancer and artistic director) recalls: "None of us had seen choreography like that for a woman. It was so athletic and desperate and demanded such stamina. Back then it was hard to imagine anyone but Monica doing it. She was so strong and intelligent and musical, and she had this incredibly expressive face. She looked a little bit like the young Joan Crawford, with those very dark, expressive eyes."

Now Mason is 70 and, as artistic director of the Royal herself, is overseeing a revival of MacMillan's ballet. The former party girl has a DBE, and a relaxed but very assured graciousness to match. Yet that role still feels like hers. "The choreography is ingrained in me. I don't even need to look at a video when I teach it to my dancers. If the music comes on the radio when I'm at home I still get up and sort of do it in the kitchen."

The revival of Rite forms part of the triple bill that will close the Royal Ballet's current season; and after that Mason has just one more to direct before she retires. Although she doesn't like "big goodbyes" she has planned this final season as a personal farewell.

It will also include some of the ballets in which she most enjoyed dancing, such as Nijinska's Les Noces and MacMillan's Song of the Earth, and some of the ballets she has commissioned herself from her own young stable of choreographers. These include Christopher Wheeldon's Alice which, as the first full-length ballet commissioned by the company in 16 years and costing the company about £1.5m, was one of the gambles of Mason's career. But it was also one of the pleasures. "It got mixed reviews," she says serenely, "but what was astonishing was the atmosphere in the company while Christopher was creating it. Everyone felt they were part of something extraordinary. I only remember that happening with a very few ballets – Kenneth's Romeo, and Fred's Fille."

The ballets in this final season reflect a career that has lasted for more than five decades, and already the wires are buzzing about who will succeed her as director. Mason herself has been consulted on the shortlist but is sworn to silence. Outside the building, predictions vary wildly. There seems to be just one thing on which everyone agrees, which is that Mason will be hard to follow.

"She is pure blood line," says Dowell. "When she came into the job she knew the Royal's traditions inside out." Just as exceptional has been Mason's ability to balance directorial power with an almost maternal care. "Her door is always open," says the dancer Edward Watson. "She is always willing to talk through her decisions with you. You never come away feeling hard done by." One detail reveals much about her directorial style. When Mason joined the company in 1958 its director, Ninette de Valois, was reverentially referred to as Madame. Mason herself is universally known as "Mon".

She was born in Johannesburg in 1941. There were no professional theatre connections in the family but a lot of dancing. "I used to love watching my parents do ballroom dancing together, they looked so cool. When I was tiny I used to dance with my father, standing on his shoes." At the age of four she was sent to her first ballet class. And although her classes were slotted into a "very sporty, sunny, South African childhood, with lots of swimming and tennis", by the time she was 12 she knew she wanted to make ballet her career.

Exactly how that would happen Mason had no idea, given how little professional ballet there was in 1950s Johannesburg. But then her father died, suddenly. Her mother no longer wanted to live in South Africa: "It had too many memories for her," Mason recalls "and Johannesburg was a very dangerous place for a woman on her own. The poverty and the crime were terrible." So Mason, her mother and sister came to live in London, in a small bed and breakfast in Finsbury Park.

To 14-year-old Monica, the city seemed tantalisingly filled with ballet. She saw Margot Fonteyn dancing Giselle; and when she was unable to get a ticket to the Bolshoi's first London season she stood in the street outside, peering through a crack in a door, knowing that somewhere inside the Opera House, the legendary Russian ballerina Galina Ulanova was dancing.

Then the following year, the door opened wide. Mason was given a place at the Royal Ballet School and after a year's study was accepted into the company. Today, 16 may seem a young age to start, but Mason was mature for her years. "I had grown up fast after my father died. I had to. On the boat to England everyone thought I was 18." Others also noticed her maturity. During Mason's first couple of seasons in the corps de ballet she assumed she was indistinguishable from all the other Swans, Wilis or Fairies. But choreographers and coaches were spotting her tall, strong body and beauty. Adult solo roles started to come her way, such as Gertrude in Robert Helpmann's Hamlet.

Now Mason finds the incongruity of that casting amusing. "I was still completely virginal." But she also recognises that it was the start of "a strange and interesting career". More small roles followed and then the breakthrough of Rite. Yet while Mason revelled in her chances she also discovered that "interesting" could be a handicap. Fonteyn, with her ultra feminine, ultra classical style of dancing had set the mould of the company's ballerina. And while Mason was promoted to principal status in 1968, she found herself regularly excluded from the most high profile roles such as Giselle, Aurora or Cinderella. Even MacMillan, who created a total of five new roles for her, did not use her for his two most famous heroines, Juliet and Manon.

Mason grew frustrated. Yet when she steeled herself to ask Frederick Ashton – now director of the company – why he did not use her more, Ashton claimed, evasively and outrageously that he didn't like Mason's nose. He suggested she might have it fixed. Today Mason enjoys the effrontery of that remark – "imagine me having that conversation with my dancers" – although at the time she almost considered having the surgery.

She resisted and moved on: focusing not on the roles that were denied her but on those in which she excelled, particularly the abstract modern ballets that were entering the repertory. These suited Mason's body as well as her independence, and she now acknowledges that she would have relished the opportunity to work in contemporary dance. "I've always loved the work of Pina Bausch. Recently when I saw that wonderful Wim Wenders film I thought, I would have loved to have experienced Pina."

It was perhaps Mason's chequered experiences as a dancer that gave her an eye for spotting maverick talent in others. Watson – red-haired, slight and edgy – never expected to succeed as a classical prince and remains convinced that no one but Mason would have promoted him to principal. Another of Mason's protégés has been Lauren Cuthbertson. "All those amazing things we now see in Lauren," Watson says, "like her incredible musicality, her phrasing and detail – Monica spotted those long before the rest of us."

If Mason likes to fast-track special talents it is because dancers' careers are short. By the time she was 39 she was ready to hang up her pointe shoes; at the same time her marriage to a former dancer was unravelling in a painful divorce. It was MacMillan, again, who played a crucial role. When he heard Mason was planning to leave the company, and had even auditioned for work as a radio presenter, he offered her a job as his assistant.

Working alongside MacMillan, coaching his dancers in rehearsal, helping him in the process of creating new work, opened up a second career for Mason. She discovered she liked "being able to fix things", and she began to do more coaching in the company, including remedial classes for injured dancers. It was Mason who first instituted a culture of therapy and diagnostic care and Darcey Bussell was one of many who owed their return to the stage to her skills. "Monica's a genius at coping with injured dancers," Bussell has said. "She helped me to get both my body and my confidence back."

In 1986 Mason's work expanded when Dowell, as newly appointed artistic director, asked her to become his assistant too. Helping Dowell with the daily running of the ballet – the problem solving, the casting decisions – acquainted Mason with nearly every aspect of company life. Also with its politics. "Anthony and Kenneth got on well," she says tactfully, "but they clashed on small issues. I felt loyal to both of them and that was the period in my life when I learned how to negotiate."

At the time Mason had no notion that she was on a learning curve to becoming director herself. "I was happy and fulfilled. I only ever thought of myself as an assistant." It took a crisis within the company to force a change of perspective. In 2001 Dowell was succeeded by Ross Stretton, former director of Australian Ballet, but it was not a success. Mason agreed, temporarily, to take over. Once she had taken up the post, however, she discovered she had a genuine appetite for power. She'd been given a lovely welcome – spontaneous cheers from the dancers – and was amused to discover that "Once you were in the big office you got so much help. After six weeks I realised I was having such a good time that I'd be upset if they didn't offer me the job full time." Still, the job turned out to be far bigger than she could have imagined. The company now performs nearly 50% more shows than they did in Dowell's day, and the workload of education, outreach and fundraising projects has increased enormously.

It wasn't just the size of the job that Mason had to contend with. The obvious difference between being assistant and director is that the latter is held responsible for the company's image. Suddenly Mason's decisions were in the public eye, and several of them were criticised as over-cautious. She appeared to be conservative in the commissioning of new works; she didn't chase after international choreographers such as Mark Morris and Alexei Ratmansky and in programming her seasons she favoured, perhaps too heavily, the MacMillan repertory that she loved. While the dancers in the company flourished under Mason's care, doubts were voiced as to whether she herself had the chutzpa to be a vibrant, visionary director.

In 2006 she proved she did. Wayne McGregor, the experimental modern dance choreographer, had a phenomenal success with the ballet Chroma that he'd created for the company. Mason appointed McGregor as her resident choreographer. And while McGregor was anything but "pure blood line", the decision was a strategic success for the company. The subsequent ballets that McGregor choreographed brought in a new, young and curious audience (the holy grail of any ballet company). He had a galvanising effect on the building, including the company's younger choreographers.

It's in search of new audiences that Mason has taken another bold decision, sending the company out to dance Romeo and Juliet at the O2 Arena. Ballet can struggle to make in impact in such a large space, and while Mason has commissioned film sequences to amplify the live action, there are no guarantees the experiment will work. She is characteristically pragmatic: "You just have to try new things. And if we don't go into the O2 first, some other company will."

Even if the O2 experiment goes wrong, Mason has enjoyed so many successes in recent seasons it will hardly register. But she acknowledges that it will be a wrench when she has to leave her office for the last time. "After so many years, this theatre has become my life, it's almost family." She says she will miss almost everything about the job: not just seeing dancers flourish and working alongside "brilliant people" but the problem fixing, the uncertainties, even the bone-aching exhaustion.

She has deliberately made no plans for what she will do next, other than heading off to the Apple Shop to sign up for computer lessons. "I don't even know how to turn a computer on. I've always had someone else to do my emails for me."

Mason's dancers are adamant that they don't want to lose her. "I've known Mon since I was 18," says Mara Galeazzi, a principal in the company. "I've learned so much from her. She must have been like a sponge when she was young, absorbing everything from all those great dancers and teachers. She has a natural gift, a fantastic eye. I really hope she stays around."